Exhibit 10.31
                                                              -------------
                            SECURITY AGREEMENT
                            ------------------

A.   PARTIES

     1.   Touchstone Applied Science Associates, Inc.,
          Fields Lane, P.O. Box 382
          Brewster, New York  10509
          ("Debtor" hereafter)

     2.   MSB Bank
          35 Matthews Street
          Goshen, New York  10924
          ("Bank" hereafter)

B.   AGREEMENT

     Subject to the applicable terms of this security agreement,
Debtor grants to Bank a security interest in the Collateral to
secure the payment of the Obligation.

C.   OBLIGATION

     The following is "the Obligation" secured by this agreement:

     1.   Promissory note dated August  28, 1997, in the amount of
     $300,000.00.

     2.   All past, present, and future advances, of whatever type,
          by Bank to Debtor, and extension and renewals thereof,
          whatever or not of the nature contemplated at the date
          hereof.

     3.   All existing and future liabilities, of whatever type, of
          Debtor to Bank and including (but not limited to)
          liability for overdrafts and as endorser and surety.

     4.   All costs incurred by Bank to obtain, preserve, and
          enforce this security interest, collect the Obligation,
          and maintain and preserve the Collateral, and including
          (but not limited to) taxes, assessments, insurance
          premiums, repairs, reasonable attorneys  fees and legal
          expenses, rent, storage costs, and expenses of sale.

     5.   Interest on the above amounts, as agreed between Bank and
          Debtor, or if no such agreement, at the maximum rate
          permitted by law.  

D.   COLLATERAL

     1.   The security interest is granted in the following,
          hereinafter called the "Collateral":

          (a)  all machinery, equipment, fixtures, appliances and
          furniture now owned or hereafter acquired by Debtor and
          wherever located.

          (b)  all inventory now owned or hereafter acquired and
          products and proceeds thereof.

          (c)  all accounts, contract rights, and accounts
          receivable, now or hereafter in existence and all
          proceeds thereof, and all returned or repossessed goods
          arising from or relating to any of said accounts or
          rights.

          (d)  all substitutes and replacements for, accessions,
          attachments, and other additions to, and tools, parts,
          and equipment used in connection with any of the above.

          (e)  all property similar to the above hereafter acquired
          by Debtor.

          (f)  all general intangibles, now or hereafter acquired
          of arising.

          (g)  all cash or non-cash proceeds of any of the
          foregoing, including insurance proceeds.

          (h)  all ledger sheets, files, records, documents, and
          instruments (including, but not limited to, computer
          programs, tapes and related electronic data processing
          software) evidencing an interest in or relating to the
          above.

     2.   The location of the office where records concerning
          rights are kept is Debtor s address above stated.

E.   AGREEMENTS OF DEBTOR

          1.   Debtor will:  take adequate care of the Collateral;
          insure the Collateral for such hazards and in such
          amounts as Bank directs, policies to be satisfactory to
          Bank; pay all costs necessary to obtain, preserve, and
          enforce this security interest, collect the Obligation,
          and preserve, and enforce this security interest, collect
          the Obligation, and preserve the Collateral, including
          (but not limited to) taxes, assessments, insurance
          premiums, repairs, reasonable attorneys  fees and legal
          expenses, rent, storage costs, and expenses of sale;
          furnish Bank with any information on the Collateral
          requested by Bank; allow Bank to inspect the Collateral,
          and inspect and copy all records relating to the
          Collateral and the Obligation; sign any papers furnished
          by Bank which are necessary to obtain and maintain this
          security interest; assist Bank in complying with the
          Federal Assignment of Claims Act, where necessary to
          enable Bank to become an assignee under that Act; take
          necessary steps to preserve the liability of account
          debtors, obligors, and secondary parties whose
          obligations are part of the Collateral; transfer
          possession of all instruments, documents, and chattel
          paper which are part of the Collateral to Bank
          immediately, or to those hereafter acquired, immediately
          following acquisition; perfect a security interest (using
          a method satisfactory to Bank) in goods covered by
          chattel paper which is part of the Collateral; notify
          Bank of any change occurring in or to the Collateral, or
          in any fact or circumstance warranted or represented by
          Debtor in this agreement or furnished to Bank, or if any
          event of default occurs.

     2.   Debtor will not (without Bank s consent): remove the
          Collateral from the locations specified herein; allow the
          Collateral to become an accession to other goods,; sell,
          lease, otherwise transfer, manufacture, process,
          assemble, or furnish under contracts of service, the
          Collateral to be affixed to real estate, except goods
          identified herein as fixtures.

     3.   Debtor warrants:  no financing statement has been filed
          with respect to the Collateral, which remains in effect,
          other than relating to this security interest; Debtor is
          absolute owner of the Collateral, and it is not
          encumbered other than by this security interest (and the
          same will be true of the Collateral acquired hereafter
          when acquired); all account debtors and obligors, whose
          obligations are part of the Collateral, are to the extent
          permitted by law prevented from asserting against Bank
          any claims or defenses they have against sellers.

F.   RIGHTS OF BANK

               Bank may, in its discretion, before or after
          default:  terminate, on notice to Debtor, Debtor s
          authority to sell, lease, otherwise transfer,
          manufacture, process or assemble, or furnish under
          contracts of service, inventory Collateral, or any other
          Collateral as to which such permission has been given;
          require Debtor to give possession or control of the
          Collateral to Bank; endorse as Debtor s agent any
          instruments or chattel paper in the Collateral; notify
          account debtors and obligors on instruments to make
          payment directly to Bank; contact account debtors
          directly to verify information furnished by Debtor; take
          control of proceeds and use cash proceeds to reduce any
          part of the Obligation; take any action Debtor is
          required to take or otherwise necessary to obtain,
          preserve, and enforce this security interest, and
          maintain and preserve the Collateral, without notice to
          Debtor, and add costs of same to the Obligation (but Bank
          is under no duty to take any such action); release
          Collateral in its possession to Debtor, temporarily or
          otherwise; take control of funds generated by the
          Collateral, such as dividends, interest, proceeds or
          refunds from insurance, and use same to reduce any part
          of the Obligation; waive any of its rights hereunder
          without such waiver prohibiting  the later exercise of
          the same or similar rights; revoke any permission or
          waiver previously granted to Debtor.

G.   MISCELLANEOUS

               The rights and privileges of Bank shall inure to its
          successors and assigns.  All representations, warranties,
          and agreements of Debtor shall bind Debtors s successors
          and assigns.  Definitions in the Uniform Commercial Code
          apply to words and phrases in this agreement.  Debtor
          waives presentment, demand, notice of dishonor, protest,
          and extension of time without notice as to any
          instruments and chattel paper in the Collateral.  Notice
          mailed to Debtor's address in A, or to Debtors, or to
          Debtors most recent changed address on file with Bank, at
          least five days prior to the related action (or, if the
          Uniform Commercial Code specified a longer period, such
          longer period prior to the related action), shall be
          deemed reasonable.  A photographic or other reproduction
          of this agreement, or any financing statement signed by
          Debtor, is sufficient as a financing statement.

H.   DEFAULT

     1.   Any of the following is an event of default:  failure of
          Debtor to pay note in the Obligation in accordance with
          its terms, or any other liability in the Obligation when
          due, or if a demand obligation, on demand, or to perform
          any act or duty required by this agreement or any other
          provision of the Note or Term Loan Agreement; falsity of
          any warranty or representation in this agreement when
          made; substantial change in any fact warranted or
          represented in this agreement; involvement of Debtor in
          bankruptcy or insolvency proceedings;, dissolution, or
          other termination of Debtor s existence; merger or
          consolidation of Debtor with another; substantial loss,
          theft, destruction, sale, reduction in value, encumbrance
          of, damage to, or change in the Collateral; modification
          of any contract, the rights to which are part of the
          Collateral; levy on, seizure, or attachment of the
          Collateral; judgment against Debtor which is not paid or
          discharged pursuant to the provisions of the Term Loan
          Agreement; filing any financing statement with regard to
          the Collateral, other than relating to this security
          interest and other than purchase money financed
          equipment; Bank s belief that the prospect of any payment
          of any part of the Obligation or the performance of any
          part of this agreement, is materially impaired; default
          on the payment when due of any other indebtedness for
          borrowed money owed by the borrower to the bank any other
          person or entity and the expiration of applicable cure
          periods, or any obligation of the borrower for payment of
          borrowed money when it becomes or is declared to be due
          and payable prior to the expressed maturity thereof.


     2.   When an event of default occurs, the entire Obligation
          becomes immediately due and payable at Bank s option
          without notice to Debtor, and bank may proceed to enforce
          payment of same and exercise any and all of the rights
          and remedies.  When Debtor is in default, Debtor upon
          demand by Bank, shall assemble the Collateral and make it
          available to Bank at a place reasonably convenient to
          both parties.  Debtor is entitled to any surplus and
          shall be liable to Bank for any deficiency, arising from
          accounts, contract rights, or chattel paper included in
          the Collateral through sale thereof to Bank.


I.   FIRST AND PROPER LIEN

          This security agreement grants to Bank a first and prior
          lien to secure the payment of the Obligation listed
          herein, and extensions and renewals thereof.  If Bank
          disposes of the Collateral following default, the
          proceeds of such disposition available to satisfy the
          Obligation shall be applied first to the notes included
          therein, and thereafter to all remaining indebtedness
          secured hereby, as well as any other indebtedness owed to
          the bank, in the order in which such remaining
          indebtedness was executed or contracted.  For purposes of
          this paragraph, an extended or renewed note will be
          considered executed on the date of the original note.


                                 Touchstone Applied Science Associates, Inc.




                                 By:  /s/ ANDREW L. SIMON
                                      -------------------
                                      President
     

Attest:



/s/ MAUREEN CRUSH
------------------
Attorney